Like several of its peers among the public home builders, Meritage Homes Corp. has decided it no longer needs a revolving line of credit.

Meritage announced Tuesday in an 8K filing with the Securities and Exchange Commission that on Sept. 28 it terminated its $150 million credit agreement, which was administered by Guaranty Bank as agent for a group of bank lenders. The company said the move would not involve penalties or costs but that it expects to book a non-cash charge of approximately $800,000 in its third quarter to write-off capitalized origination fees. The move is expected to save the company $2 million over the life of the terminated agreement, which would have expired in May, 2011.

The company also said it had $19 million in letters of credit outstanding under the revolver. The company has entered into secured letter of credit arrangements with the three banks that had issued those outstanding letters of credit for an aggregate capacity of approximately $53 million. Under these letters of credit, Meritage will be required to deposit cash, in an amount at least equal to the obligations related to the letters of credit, as collateral deposits with and pledges to the issuing banks.

Prior to the termination, Meritage was in compliance with all covenants under the agreement and had no borrowings against it.

In the filing, Meritage stated, "Recently, the company has only used availability under the credit agreement to provide letters of credit required in the ordinary course of its business and to support certain obligations of certain of our joint ventures. The company does not believe that it needs the credit agreement to meet its liquidity needs at this time and that it will be able to fund its homebuilding operations through its existing cash resources for the foreseeable future."